States / Michigan
MI state income tax · checked October 14, 2026
Does Michigan tax tips and overtime?
For 2026 through 2028, Michigan lets you deduct the same tips and overtime you deduct federally. Not for 2025.
| Michigan return | Tips | Overtime |
|---|---|---|
| 2025 | Taxed | Taxed |
| 2026 | Not taxed (follows federal) | Not taxed (follows federal) |
The details
2025 PA 24 added a Michigan deduction equal to the federal qualified tips and qualified overtime deductions for tax years beginning after December 31, 2025 and before January 1, 2029.
Residents deduct the full federal amount. Nonresidents deduct only tips and overtime for work performed in Michigan.
The federal deductions apply either way. See who qualifies for no tax on tips, how the overtime deduction works, and where both go on Schedule 1-A.
States with the same 2026 treatment
All 50 states and D.C. · Massachusetts · Minnesota
Questions
Does Michigan tax tips in 2026?
For 2026, Michigan doesn’t tax the qualified tips you deduct on your federal return.
Does Michigan tax overtime in 2026?
For 2026, Michigan doesn’t tax the qualified overtime you deduct on your federal return.
What about my 2025 Michigan return?
For 2025, Michigan taxes tips in full. For 2025, Michigan taxes overtime in full.
Does the federal deduction still apply?
Yes. Whatever your state does, you can still claim the federal deductions on Schedule 1-A if you qualify: up to $25,000 of qualified tips per return and up to $12,500 of qualified overtime ($25,000 joint), phasing down above $150,000 of MAGI ($300,000 joint).